6/03/2010 @ 2:25PM

BP Dividend A Concern, And Not Just For Shareholders

Embroiled in a political and environmental firestorm over its unsuccessful efforts to halt its leaking well in the Gulf of Mexico,
BP
is also under pressure from the financial community as ratings agencies slash the companys credit grades and investors fret over whether the companys rich dividend will survive the crisis.

In such an environment, the last thing
BP
Chief Executive
Tony
Hayward
Tony Hayward
needs is any further uproar, but with U.S. Senators Chuck Schumer (D-N.Y.) and Ron Wyden (D-Ore.) calling it unfathomable that the company will continue paying dividends without knowing the extent of the clean-up costs, the shareholder payout, which totaled some $10.4 billion in 2009 according to the Associated Press, has become the latest battlefront.

Shares of BP have plummeted since the April 20 explosion that destroyed the
Transocean
rig drilling the well and took the lives of 11 workers. That slide has substantially boosted the yield offered by the companys 84-cent per share dividend, which has climbed to near 9%.

In different times that yield would make the stock a screaming buy, but it seems clear that BPs leadership will at least need to consider culling the dividend given that the cost of the clean-up is likely to put a substantial dent in the companys balance sheet. And it wont only be shareholders who suffer if BP trims its payout.

BP’s board holds less than 1% of the company’s stock, but that small percentage would entitle the six executive board members to receive more than $2 million combined if the company maintains its projected dividend of $3.36 for the full year. Hayward’s stock holdings would pay him $348,771 alone.
Carl-Henric
Swanberg
Carl-Henric Swanberg
, BP’s chairman of the board, would get $420,000.

In a public statement Thursday, Hayward said BP is committed to recovering every drop of oil and will fulfill its obligations to stakeholders and Gulf Coast residents.

A BP representative could not be reached for comment on the letter or on BP’s projected dividend.